Ibstock: The recovery of the real estate market “will take time” to generate greater demand for materials

Early signs of higher home construction volumes will not immediately translate into higher sales of building materials products, Ibstock warned.

The brick maker saw “some early signs of an improvement” in residential new-build levels during the three months to September.

Mortgage and inflation rates in Britain have normalized in recent months, raising hopes among the construction industry of a recovery in trade.

However, Ibstock warned that it would “take time to achieve stronger, more sustainable demand for our products” due to the need to revitalize supply chains.

The Leicestershire-based company made the announcement by revealing that adjusted profits before the unpleasant events were “broadly in line” with forecasts for the third quarter.

It also said sales volumes were proportional to the equivalent period last year, while margins were supported by good cost management and selling prices.

As a result, the FTSE 250 group has maintained the full-year guidance it provided when publishing its half-year results in August.

Joe Hudson, chief executive of Ibstock, said: ‘We have seen some early signs of activity levels recovering in the residential new build markets, which should fuel sustainably stronger demand for our products in due course.

“In this context, we have made some carefully selected investments to restore product line capacity in some areas of our core markets.”

Ibstock is ramping up production at its new Atlas clay brick factory, which it expects to produce 105 million bricks a year once operating at full capacity.

In addition, it anticipates that the Nostell site near Wakefield, Yorkshire, will deliver around 50 million units of bricks to the market when fully operational.

During the general election campaign, Labor promised to build 1.5 million new properties over five years, partly by developing them on lower quality land in the “grey belt” and hiring more planning officers.

Only 183,610 new homes were built across the UK in the 12 months to March 2024, down 13 per cent on the previous year, according to recent figures from the Office for National Statistics.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: ‘The new government’s focus on reforming the national planning framework and accelerating the delivery of new homes is a huge positive for the industry.

But he added: “How long it takes for the property market to truly come back to life is outside Ibstock’s control and remains to be seen.”

ibstock shares They rose 0.5 per cent to 193.4 pence on Thursday morning, taking their gains over the past year to 43 per cent.